The Competition Between Water and Energy

Bojana Radan

By 2025, two thirds of the world’s population will be under water stress. By this date, world water withdraws have been estimated to increase by 50 percent in developing and emerging states and 18 percent in established economies. Fifteen years later by 2040, the world’s major powers, the United States, China, and India will see their own water stress increase by 40 to 70 percent in some regions, severely putting a strain on an already limited resource.

Global water risk continues to grow and expand. A number of compounding concerns are responsible – population growth, the shift towards meat-based diets, climate change, and the continuous degradation of water through pollution. Most critically, water risk will exponentially intensify the water-energy nexus due to the collision between water and energy use.

Water and energy are in serious competition. We consume a vast amount of water to generate energy, and then we consume a large amount of energy to extract, process and deliver clean water. Massive amounts of freshwater are needed to cool thermo-electric plants, drive turbines for hydropower, and extract and process oil, gas, coal, metal and chemicals. The Aqueduct Risk Atlas is a global water risk mapping software, which helps companies, investors, and governments understand where and how water risks and opportunities emerge worldwide. Below is a snapshot of the current global water risk.

Figure 1:The Aqueduct Water Risk Atlas show as overview of the world’s current water risk. This map is based on a combination of physical water risk, both quality and quantity, and regulatory and reputational risk. Light beige indicates areas of low water risk while dark red indicates high water risk with the spectrum falling between.

As seen above in the water risk atlas, major energy producing regions such as China, India, the Middle East, South Africa and parts of the US and Mexico are already in high water stress. The Pacific Institute defines three categories of water-related issues. Water scarcity is the volumetric lack or availability of a water supply and is defined as the amount of water consumed, over the amount available. Water stress is the lack of water to meet human or ecological demand and includes issues regarding water scarcity, water quality, environmental flows and accessibility of water. Finally, water risk is the probability that an entity will experience a deleterious water-related event and can be felt through many different sectors. This includes risk created through water scarcity, pollution, climate change, poor governance, and inadequate infrastructure.

The water-energy nexus encompasses all three of these water-related issues. Energy power plants tend to be placed in areas with water scarcity due to the common geographical isolation of natural resources such as coal and oil, from waters sources such as rivers and lakes. Water stress tends to be created once energy firms begin to extract resources due to their high reliance on water for the energy-making process. Finally, water risk shapes the future of water availability in these regions especially since energy expansion tends to be valued over water protection. Therefore, these compounding water risks lead to continued severe water stress in major energy producing regions such as the Middle East and North Africa (MENA), China’s Ningxia province, and the United States.

MENA’s Water Risk

Fourteen of the 33 most likely water stressed countries in 2040 will be in the Middle East. Nine are considered extremely water stressed with the maximum water risk score of 5.0: Bahrain, Kuwait, Palestine, Qatar, United Arab Emirates, Israel, Saudi Arabia, Oman and Lebanon. This region, which is already the most water stressed in the world relies heavily upon groundwater and desalinated sea water to meet its water demands. By 2050, the World Bank estimates that more than 85 percent of water in Iraq, Saudi Arabia, Morocco, Egypt and Yemen will need to be processed through desalination. In a region already under high political and economic turmoil and instability, this rise of water risk poses a significant threat including the risk of future conflict.

Next, is it probable that the world will experience a future with transnational water conflict? There have been 38 acute disputes of violence surrounding water resources between 1948-2008 and 31 have been with Israel and its neighbours. Furthermore, historically cooperative water conflict events outnumber conflict events two to one. However; this probability can significantly increase when water demand outstrips available supply. It is not the shortage or lack of water that leads to conflict but it is how this water is governed and managed that becomes the conflict point. When competing interests clash due to upstream or downstream impacts of water management changes, the economic risks can lead to the risk of conflict.

The establishment of treaty-based institutional legal agreements has reduced the likelihood of conflicts because they provide a certain level of predictability in an otherwise uncertain situation. For example, The Indus Water Treaty, a water-distribution treaty that was brokered by the World Bank between India and Pakistan regarding the control of six border rivers is still in place today after 60 years of implementation and two wars between the states. States tend to enter cooperative agreements only when the costs of not cooperating outweigh the costs of inclusion. Treaties must also contain: clear and flexible allocation criteria, equitable distribution benefits, and detailed conflict-resolution mechanisms. In these circumstances the costs of inclusion tends to significantly decrease. Therefore, with increasing water stress in MENA due to continued oil extraction, drought, and increased energy use for desalination, creating the appropriate institutional frameworks for governing water use may be the next legal global challenge.

China’s Ningxia Province

China is home to the world’s largest number of thermoelectric power plants, most of which use a significant amount of freshwater to cool their coal-fired generating facilities. In 2015, 67 percent of China’s energy was from gas and coal-fired power plants, which for a population and the energy needs is a significant amount of energy and fresh water lost from nearby lakes to cool an extensive energy-making process.

The issue with these rising consumption and energy levels is that it is unsustainable. Below is a map of China’s coal-fired plants; 60 percent are in high or extremely high water stress areas and new ones proposed to be built will be concentrated in the six driest provinces of the state. Furthermore, projections to 2040 suggest that climate change will also intensify water stress in these dry provinces by 40 to 70 percent on top of the water stress already seen today, which causes a lot of water risk for China’s energy sector and business investment within the state.

Figure 2: 60 percent of China’s coal-fired plants are in high or extremely high water stressed areas. Similarly in 2014, more than 90 percent of the states electric generation capacity was from thermoelectric (coal, gas, nuclear) and hydroelectric power plants, while only 8 percent was from solar and wind renewable, which have relatively negligible onsite water requirements.

United States Fracking Risk

The US has recently tapped into the development of unconventional oil and gas resources including shale gas, coalbed methane, heavy oil, tar sands, and other hydrocarbon reserves. In the US specifically, there are considerable amounts of shale gas reserves and tight oil contained in low-permeability shale formation that can only be accessed through hydraulic fracturing or ‘fracking.’ Fracking is a process that uses high pressurized water or other fluids to fracture rocks to release gas and oil. It demands, however, a high water-intensive process. This high cost of water waste compounded with the fact that most US shale projects are in arid regions, or regions with extreme water stress comprise a large water risk for the US.

Although supporters of fracking argue that the process only uses 1/1000 of the US water supply; since it is a highly localized process, it can actually end up using 1/3 of the total local water resource. Furthermore, fracking also contributes to groundwater depletion, growing competition for freshwater in the region, and water quality degradation, making areas with shale gas very water stressed.

Lastly, the US also deals with natural water stress from continuous droughts in its southwestern states. The period between late 2011 and 2014 was the driest in California’s history, so much so that the Governor, Jerry Brown, in June 2015, imposed a 25 percent mandatory water reduction policy and in turn had to scale back agricultural output. Similarly, there is a depletion of ground water reserves to the point where parts of San Joaquin Valley in California are sinking as fast as two feet a year because of the over-pumping of ground water. Water supply is not meeting water demand in this region. Water stress is a continuing issue for the foreseeable future.

Moving Forward

With high levels of water stress globally and increasing energy and consumption demands, what are some of the ways that the international community can mitigate these risks? First, energy needs to transition to more sustainable forms. There needs to be a global divestment away from dirty fossil fuels to more renewable energy sources such as wind and solar that have almost negligible water waste usage. Second, there needs to be an increase in water waste management, specifically water waste reuse in high energy intensive processes such as desalination and fracking. Lastly, good governance policies and behaviours for water usage amongst the global community need to be adopted. For example, the UN Global Compact, which is a UN organization of over 9000 companies promoting sustainable business practices has created the CEO Water Mandate; an initiative to mobilize business leaders to advance water stewardship, sanitation and global climate goals within their businesses. They recognize that suitable water governance practices are a win-win situation for business. These practices result in the long-term to sustainability of their projects. These practices also lead to future mitigation from the negative impacts of climate change. Therefore, these institutionalized good governance policies need to become ‘mainstream’ among businesses and states to be able to have a sustainable water-energy nexus.

About the Author

Bojana Radan is a second year Masters student at the Munk School of Global Affairs with a strong interest in global health, climate sustainability, gender equality and good governance. Bojana has worked within civil society in South East Asia advocating for youth rights within HIV development, and is the co-editor-in-chief of the Munk School student digital news publication, Global Conversations. She is a Gordon Cressy Student Leadership Recipient and a four-time Academic All-Canadian scholar. Bojana holds an Hon. Bachelor’s in Science in Molecular Genetics and Microbiology from the University of Toronto.